CME Platforms Inc. Auction Policy

Effective as of December 11, 2018

CHAPTER 1
DEFINITIONS AND INTERPRETATION

1.1      Unless the context otherwise requires, for all purposes of this Auction Policy, the following words shall have the meanings specified:

Affiliate means, when applied to any person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified;

Applicable Law means all laws, statutory provision and other rules, regulations and instruments in force from time to time, including the rules, guidance, principles and codes of practice of any Regulatory Authority;

Auction means the process as set out in Chapter 4 of the Auction Policy starting with an Initial Auction Run and ending when the Auction is closed;

Auction Data means information, including Bids, Prices, records, and reports, relating to the Auction Platform and the Participants in the Auction Platform;

Auction Platform means the system supporting the Auctions held by CME Platforms, as operated by CME Platforms Inc.;

Auction Policy means the Provisions of the Auction Platform as set out herein as they may be amended from time to time;

Auction Run means the window of time during which Participants are permitted to submit and amend Bids on the Auction Platform;

Bid means an offer to buy a particular quantity of Product in an Auction, at the price in each Bid, and constitutes an obligation under the Provisions to enter into each such Transaction as may be notified to the Participant;

Binding Transaction means the Transaction awarded to the first Participant with the highest Bid above the Floor Price, for the Price and quantity announced by the Seller as per Provision 4.5.2;

Business Day means any day Monday through Friday, excluding weekends and public holidays observed by Chicago Mercantile Exchange Inc., as listed on the cmegroup.com website.

Buyer means a Participant who is awarded a Binding Transaction to purchase Product from a Seller in an Auction;

CME Platforms means the CME Platforms Inc.;

Enterprise means Enterprise Crude Oil LLC;

Enterprise Crude Oil means the product sold by Enterprise, pursuant to Chapter Five of this Auction Policy;

Floor Price means the lowest acceptable price set by the Seller that can be submitted for the particular Product and Auction Run;

Insolvency Event means, in relation to a person, that the person: (i) is unable to pay its debts as they fall due, or (ii) becomes subject to any bankruptcy, reorganization, arrangement, insolvency, moratorium, or liquidation proceedings, or other similar proceedings under U.S. federal or state bankruptcy laws or other Applicable Law;

Inquiries has the meaning given in Provision 3.11;

Nominee has the meaning given in Provision 3.2.1(k);

Notice means any Notice published by CME Platforms;

Participant means any company, partnership or other business organization or entity, whether a Seller, potential Buyer that has been granted participation in the Auction Platform pursuant to Chapter 3 of the Provisions;

Participant Agreement means the agreement of the same name entered into between CME Platforms and each Participant setting out each party’s obligations in respect of the Auction Platform;

Participant Criteria means the criteria set out in Provision 3.2;

Participant User means a person who the Participant has registered with CME Platforms as having authority to access and submit Bids to the Auction Platform on behalf of the Participant;

Password means a user identification and password created by the Participant User for the purposes of accessing the Auction Platform;

Price means the price determined as a result of an Auction, exclusive of any applicable taxes;

Product means each product in respect of which the Auction Platform operates an Auction, as notified to the Participants from time to time;

Provision means:

(a)   Where used in reference to one or more requirements of the Auction Policy, those requirements of the Auction Policy; or

(b)   Otherwise, the Auction Policy, and any Notice issued pursuant to the Auction Policy and, for the purposes of any Provisions concerning non-compliance with, or breach of, or failure to discharge any of the Provisions, shall include terms and conditions of the Participant Agreement;

Regulatory Authority means any relevant government entity or other authority, in any jurisdiction, which is responsible for authorizing, supervising or otherwise regulating any part of the Auction Platform or its services or the Participant or its business, as appropriate, or has any other regulatory, investigative, administrative or quasi-judicial jurisdiction, power or other similar function in relation to any part of the Auction Platform or its services or the Participant or its business, as appropriate;

Representative means any person who is responsible for or acts on the behalf of CME Platforms or responsible for or acts on the behalf of a Participant and shall include each director, officer, employee or agent and any Participant User of such person, where applicable, provided that where the term Representative is applied to a Singapore Participant, Representative shall only refer to a person who carries out or is responsible for the Singapore Participant and who is in the direct employment of that Singapore Participant;

Seller means the owner of the Product as per the respective Product Chapter for each Product available on the Auction Platform;

Singapore Participant means a Participant that is located in Singapore, including but not limited to a corporation incorporated in Singapore, or a corporation incorporated, formed or established outside Singapore but acting through its branch located in Singapore;   

Spot Contract means a transaction for the purchase or sale of the Product at its current market or spot price, where it is intended that such transaction results in the physical delivery of the Product;

Transaction means a forward or spot contract, exempt from the jurisdiction of the Commodity Futures Trading Commission, to buy or sell a particular quantity of the Product in respect of which the Participant participates in an Auction entered into or to be entered into (as the context requires) between two Participants acting as principal, where the Seller intends to make delivery and the Buyer intends to take delivery, provided that where a Participant is a Singapore Participant, Transaction shall mean a Spot Contract;

Verification Officer means a primary firm contact with inherent authority to add and remove users from the Auction Platform.

In these Provisions, unless otherwise specified:

1.1.1       the table of contents and the headings are inserted for convenience only and do not affect the interpretation of the Provisions as specified;

1.1.2       references to Chapters are to the chapters of this Auction Policy;

1.1.3       references to any document are to that document as from time to time amended, restated, novated or replaced, however fundamentally;

1.1.4       references to a person include an individual, partnership, company, corporation, unincorporated body of persons and any government entity;

1.1.5       references to any statute or statutory provision include any subordinate legislation made under it;

1.1.6       references to any statute or statutory provision include any amendment or reenactment (whether with or without modification) which is that same as, or substantially similar to, the obligations imposed by the specified statute or statutory provision;

1.1.7       references to time are to the North American Central Time Zone unless otherwise specified and are set out in the 24-hour clock convention;

1.1.8       words importing the plural include the singular and vice versa and the use of any gender includes the other gender;

1.1.9       the words “other,” “including” and “in particular” shall not limit the generality of any preceding words or be construed as being limited to the same class as the preceding words where a wider construction is possible;

1.2           CME Platforms shall have the authority to interpret the Provisions. Participants may submit comments regarding CME Platforms’ interpretation of the Provisions. CME Platforms’ interpretation of the Provisions shall be final and conclusive and apply to all Participants.

1.3           This Auction Policy shall be interpreted in conjunction with any Notices. Each Participant will be bound by such Notices as may be relevant to it.

1.4           In the event of any conflict between:

1.4.1       the Auction Policy and the Participant Agreement (including any rider thereto), the Auction Policy shall take precedence;

1.4.2       the Auction Policy and a Notice, the Auction Policy shall take precedence except to the extent that a Notice amends the Auction Policy; and

1.4.3       between the Provisions and any other agreement, including any non-disclosure agreements that may have been signed between CME Platforms and a Participant, the Provisions shall take precedence.

1.5       Each Participant acknowledges and agrees that:

1.5.1     CME Platforms is not registered under the U.S. Commodity Exchange Act as a designated contract market or a swap execution facility or licensed, authorized, or regulated in any comparable manner under the laws of any other jurisdiction, and operates the Auction Platform as an unregulated cash market on which a Participant may offer Product as a Seller and other Participants may Bid in the relevant Auction to purchase the Product, and

1.5.2    The Participants enter into each Transaction as a bilateral commercial merchandizing transaction that is not subject to centralized clearing, and with the intention to make or take delivery (as applicable) of the particular Product covered by the Transaction. In any event, Participants agree that a cash settlement is unavailable as a method of final settlement of the Transaction in the case of the resale or repurchase being made by the same parties.

CHAPTER 2
GENERAL PROVISIONS


2.1       General

2.1.1    These Provisions, together with the Participant Agreement and any other documentation given contractual force pursuant to the Provisions, form a contract between CME Platforms and each Participant. No person other than CME Platforms has any obligation to Participants under these Provisions and/or the Participant Agreement. No person who is not a Participant shall have any rights to enforce any part of these Provisions or the Participant Agreement against CME Platforms or any Participant. Participants may agree, under separate contractual arrangements, that these Provisions also apply as between themselves for Transactions emanating from the Auction Platform.

2.1.2    A Participant shall not assign, transfer or create any encumbrance in relation to any of its rights or obligations under the Provisions, the Participant Agreement or any Transaction save as otherwise set out in the Provisions.

2.2       Amendments

2.2.1    CME Platforms may amend the Provisions at any time by issuing Notice to Participants. Such amendments may not go into effect retroactively without first providing Participants five (5) Business Days to review and evaluate the amendment and opt out of further participation in the Auction Platform pursuant to Provision 3.9.1 before such amendment takes effect.

2.2.2    Participants may provide comments on the amendments to the Provisions.

2.2.3    By continuing to use the Auction Platform after any amendment to the Provisions comes into effect in accordance with this Provision 2.2, a Participant will be deemed to accept any such amendments to the Provisions. For the avoidance of doubt, no Participant shall be entitled to use the Auction Platform unless it accepts the Provisions.

2.3       Limitations of liability

2.3.1    Neither this Provision nor any other Provision shall exclude or restrict the liability of CME Platforms:

(a)       in respect of the fraud, bad faith, willful misconduct or gross negligence of CME Platforms;

(b)        in respect of personal injury or death resulting from negligence, recklessness or an intentional act or omission; or

(c)        otherwise to the extent it cannot be excluded or restricted in accordance with the Applicable Law.

2.3.2    Subject to Section 2.3.1, CME Platforms and each of its Affiliates and each of their respective Representatives shall not be liable to any person for any losses, liabilities, damages, claims, costs or expenses arising from:

(a)            any failure, malfunction, fault in delivery, delay, omission, suspension, inaccuracy, interruption, termination, or any other cause, in connection with the furnishing, performance, operation, maintenance, use of or inability to use, all or any part of any of the systems and services of the Auction Platform or services, equipment or facilities used to support such systems and services, including the entry and delivery of an electronic Bid, Bidding, trading through any electronic means, electronic communication of market data or information, workstations used by Participants, Participant Users, Representatives of Participants (including a Nominee) price reporting systems and any and all terminals, communications networks, central computers, software, hardware, firmware and printers relating thereto;

(b)            any failure or malfunction, fault in delivery, delay, omission, suspension, inaccuracy, interruption or termination, or any other cause, of any system or service of the Auction Platform or services, equipment or facilities used to support such systems or services, caused by any third parties including independent software vendors and network providers;

(c)             any errors or inaccuracies in information used in any systems of the Auction Platform or services provided by the Auction Platform;

(d)            any unauthorized access to or unauthorized use of any Auction Platform systems, services or facilities by any person;

(e)            any error, delay or inaccuracy in the submission of a Bid or the transmission of information to the Auction Platform;

(f)             any failure by a Participant to enter into a Transaction as notified to the Participant;

(g)            the acts or omissions of any Participant or any third party, and any of their respective Representatives or agents;

(h)            any dispute relating to the validity, existence or any economic terms of any Transaction between two Participants or the contractual terms between them governing the Transaction;  

(i)              any inability to perform its obligations under these Provisions as a result of a Force Majeure Event; or

(j)              any claim of a person who is not a Participant.

2.3.3    The exclusions and limitations of liability in this Provision shall apply whether:

(a)            a claim arises in contract, tort, negligence, strict liability, breach of statutory duty, contribution or otherwise; or

(b)        a claim is brought directly or as a third-party claim.

2.3.4    Neither CME Platforms nor any of its Affiliates, nor any of their respective Representatives, shall in any circumstances be liable to a Participant or any other person for:

(a)            loss of or anticipated loss of profit, loss of or anticipated loss of revenue, loss of use, business interruption, loss of use of any equipment, loss of any contract or other business opportunity or goodwill or punitive loss; or

(b)            indirect loss or consequential loss,

regardless of whether CME Platforms has been advised of the possibility of such loss or whether such loss otherwise could have been foreseen.

2.3.5    Except as expressly stated in the Provisions and to the extent permitted by law, neither CME Platforms, nor its Affiliates, nor any of their respective Representatives gives any express or implied warranties or representations (including warranties of satisfactory quality and fitness for a particular purpose or use) relating to any systems or services of the Auction Platform or services, equipment or facilities used to support such systems and services.

2.4       Indemnity

            Subject to the limitations of liabilities described in Provision 2.3, including Provision 2.3.4, each Participant shall, to the fullest extent permitted by law, indemnify CME Platforms, each of its Affiliates and each of their respective Representatives against any and all losses, liabilities, damages, claims, costs or expenses suffered or incurred by CME Platforms, an Affiliate or any of their respective Representatives arising directly out of or in connection with the Participant's breach of these Provisions, any Transaction or the Applicable Law including any claim by a third party and any act or omission of a Participant User save to the extent that the losses, liabilities, damages, claims, costs or expenses arise as a result of the bad faith, fraud, willful misconduct or gross negligence of CME Platforms.

2.5       Confidentiality and intellectual property

2.5.1    CME Platforms and the Participant will treat as confidential all information received from the other or acquired by it in connection with the Auction Platform including trade secrets, know how, methodology, processes, systems, computer software and other proprietary data, research and information and all related documentation and shall not, unless otherwise agreed, subject to Provisions 2.5.2 and 2.5.3, disclose it to any other person (other than to each of their respective Representatives and advisors for purposes contemplated by the Provisions) or use it for any purpose other than as contemplated by the Provisions and shall take all reasonable steps to ensure that each of their respective Representatives and advisers keeps it confidential and does not disclose it or use it for any other purpose.

2.5.2    Confidential information does not include information which:

(a)            is in or comes into the public domain other than as a result of a breach of Provision 2.5.1 by CME Platforms or any Participant or each of their respective Representatives or advisers;

(b)            is developed by CME Platforms or the Participant independently of the services provided by the Auction Platform or the Participant’s involvement in the Auction Platform; or

(c)             is submitted to the Auction Platform by the Participant or its Representatives or advisers including information in a Bid; information which is displayed by the Auction Platform or otherwise distributed or sold by CME Platforms or an Affiliate in accordance with its standard policies and procedures, provided that such displays or disclosures will not identify the Participant by name.

2.5.3    CME Platforms may also disclose such confidential information as required to Sellers for the purposes of administering the Auction Platform, to its Affiliates, or to any Regulatory Authority. A Participant may also disclose confidential information to its Affiliates to the extent necessary to perform its obligations under this Auction Policy or to any Regulatory Authority.    

2.5.4    As between CME Platforms and each Participant, CME Platforms shall own and be unconditionally vested with all intellectual property rights in any data submitted to the Auction Platform by the Participant, including any customer data and information in any Bid, and any information arising in connection with any use or other exploitation of any such data submitted to the Auction Platform, including in combination with other data CME Platforms and its Affiliates own or may otherwise have the authority or permission to use. The Participant will promptly execute, and will use reasonable endeavors to procure that any third parties promptly execute, such documents and do such acts as CME Platforms may reasonably consider necessary to vest all such intellectual property rights in CME Platforms and to otherwise give full effect to this Provision.

2.5.5    All Auction Data, whether in existence at the effective date, or compiled thereafter in connection with the Auction Platform, shall be treated by the Seller as the exclusive property of CME Platforms, and the furnishing of Auction Data, or the granting of access to Auction Data by CME Platforms, shall not grant any express or implied interest in or license to the Seller relating to Auction Data, other than as is necessary to participate in the Auction Platform.

2.6       Data protection

2.6.1    CME Platforms is a data controller in relation to personal information provided by the Participants and their Representatives, including personal information relating to customers. Each Participant shall ensure that any of its Representatives and, where applicable, any customers or their Representatives, whose personal data is provided to the Auction Platform or CME Platforms have consented in advance to such data being (i) controlled and processed by or on behalf of CME Platforms, and (ii) processed and disclosed in accordance with Provision 2.5.   CME Platforms shall process and disclose such personal data in accordance with Applicable Law.

2.6.2    To access the Auction Platform, Participants must provide certain registration details or other information to CME Platforms. Participants are responsible for ensuring that all the information provided is correct, current, and complete. All information CME Platforms collects, including all information provided to register with the Auction Platform or otherwise, including but not limited to the use of any interactive features on the Auction Platform, is explained in further detail in CME Group Inc.’s Privacy Policy located at http://www.cmegroup.com/privacy-policy.html. Participants also may have certain rights in relation to the information the Auction Platform collects under Applicable Law as set out in CME Group Inc.’s Privacy Policy.

2.6.3    Participants are required to keep such information regarding its activities with the Auction Platform as is necessary to ensure compliance with the Auction Policy and the Applicable Laws and regulations of any Regulatory Authority for such period as required under the Applicable Laws and regulations. If there is no such period under the Applicable Laws and regulations, the period to keep the aforementioned information will be five years.

2.6.4    In the event that a Participant or CME Platforms receives a subpoena, data request, or order of a court in any private party litigation requesting confidential information of the other party, such party will promptly notify the other party of such requirement or request to the extent it is legally permitted to do so.

2.7       Severability

2.7.1    Each of the Provisions is severable and distinct from the others. It is intended that every Provision and every part of each Provision shall be and remain valid and enforceable to the fullest extent permitted by law. If any Provision or part of a Provision is or at any time becomes to any extent invalid, illegal or unenforceable for any reason, it shall to that extent be deemed not to form part of these Provisions but the validity, legality and enforceability of the remaining Provisions and parts of these Provisions shall not be thereby affected or impaired.

2.8       Waiver

2.8.1    Except as specifically provided in these Provisions, no waiver of any of these Provisions or any part thereof shall be effective unless the same shall be in writing, and then such waiver shall be effective only in relation to the Participant to which it is addressed and for the specific purpose for which the same is given, and such waiver shall not operate as a waiver of any future application of such Provision or part thereof.

2.8.2    The waiver of any right, and the failure to exercise any right or to insist on the strict performance of any of the Provisions, shall not operate as a waiver of, or preclude any further or other exercise or enforcement of that or any other right.

2.8.3    Any times fixed by these Provisions for the doing of any act or acts required by these Provisions may be waived or suspended by CME Platforms whenever, in its judgment, such extension, waiver or suspension is necessary or expedient.

2.9       Governing law and arbitration

2.9.1    The Provisions shall be governed by the internal laws of the State of New York, and the federal laws of the United States, without regard to conflicts of laws principles.  Subject to all limitations described in Provision 2.3, any controversy or claim between CME Platforms and a Participant arising out of or relating to the Provisions, together with the Participant Agreement and any other documentation given contractual force pursuant to these Provisions, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.  The place of arbitration shall be New York, New York. The arbitration shall be in English and shall be governed by the laws of the State of New York.  

2.9.2    The commencement of any arbitral proceedings pursuant to Provision 2.9.1 shall be without prejudice to and shall not limit in any way the right CME Platforms has to instigate any procedure under the Provisions, including without limitation in relation to any Inquiry.

2.9.3    As between a Seller and Buyer, Transactions shall be governed by the bilateral contractual arrangements in place between the Seller and Buyer that enable those Transactions, as required per Provision 3.2.1(j), including as to which governing law applies to any disputes arising between a Seller and Buyer regarding a Transaction.              

2.9.4    CME Platforms and each Participant is responsible for their own compliance or non-compliance with the requirements of a Regulatory Authority and not responsible for the compliance or non- compliance by any other party with the requirements of a Regulatory Authority.

2.10     No proceedings

2.10.1  Unless such action is taken by a Participant to enforce its rights against CME Platforms under this Auction Policy, or other contractual arrangement, no Participant shall take any action to commence an insolvency or reorganization proceeding (including, without limitation, by presentation of a winding up petition) in relation to CME Platforms.  

2.10.2 Unless such action is taken by a Participant to enforce its rights against CME Platforms under this Auction Policy, or other contractual arrangement, no Participant shall take any action (including, but not limited to, commencing a court or arbitral proceeding) with the intention of or that would limit or interfere with the ability of CME Platforms, acting lawfully and in good faith, to exercise its rights and perform its obligations in connection with its functions.     

CHAPTER 3
PARTICIPATION

 

3.1       Application

3.1.1    A person must, at a minimum, demonstrate to CME Platforms that it can satisfy the Participation Criteria.

3.1.2    A Participant must continue to satisfy the Participation Criteria for so long as it remains a Participant.

3.1.3    Each Participant shall act, and shall ensure that its Representatives shall act, in accordance with the Provisions.

3.1.4    A Participant shall notify CME Platforms if it reasonably foresees that it will be unable to comply with any obligations under this Auction Policy, including as a result of Applicable Laws to which it is subject.

3.2       Participation Criteria

3.2.1    To satisfy the Participation Criteria, a person must at all times:

(a)        be incorporated as a body corporate, partnership or other business organization or entity in any jurisdiction;

(b)        have and shall ensure that any Representative has (where applicable) all necessary authorizations, licenses, permissions, approvals or equivalent in respect of each Regulatory Authority which has jurisdiction over it;

(c)        comply with all Applicable Law and the requirements of each Regulatory Authority which has jurisdiction over it;

(d)        not be designated as a “Specially Designated National and Blocked Person” on the most current list (the “List”) published by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”);

(e)        not be a citizen of, located, organized under the laws of, or resident in a country or territory that is, or whose government is, the target of comprehensive sanctions implemented by the U.S. government, currently, Crimea, Cuba, Iran, North Korea, and Syria;

(f)         comply with the requirements of OFAC, its regulations, and any statute, executive order, or other governmental action relating thereto, in recognition of the fact that its Transactions are settled in United States Dollars;

(g)        not transfer or permit the transfer of any controlling interest in the Participant to any person or entity who is, or any of whose beneficial owners are, listed on the List or are 50% or more owned by persons or entities on the List;

(h)        not be subject to an Insolvency Event or any circumstances pursuant to which an Insolvency Event could be declared;

 (i)        have entered into such agreement and met such participation criteria as CME Platforms may require for the purpose of participating in the Auctions and be in compliance with these Provisions;

(j)         be willing and able to enter into Transactions with Sellers and Buyers of the Products up for Auction and have such contractual arrangements in place with each Seller and potential Buyer that would enable Transactions to be entered into, including contractual arrangements for settlement, payment, transfer of title, and delivery;

(k)        have nominated a Representative, who is sufficiently senior and familiar with the Provisions and the Participant's activities in relation to the Auction Platform, to be available to deal with any query or issue raised by CME Platforms and be responsible, for the Participant's actions and the representation of the Participant before CME Platforms (a Nominee);  

(l)         not have been, or have any senior Representative who has been, convicted of any offense involving fraud, theft, false accounting, offenses against the administration of public justice, serious tax offenses or other dishonesty or an offense relating to companies, insurance, banking, other financial services, consumer credit or consumer protection, money laundering, bribery, market abuse or insider dealing or be, or have any senior Representative who is subject to any formal investigation or have any charges brought against him or her for such an offense;

(m)       satisfy CME Platforms of its ability to meet its obligations under the Provisions and the Participant is approved by the Seller; and

(n)        if requested by CME Platforms, satisfy any further requirements in connection with the conduct of business on the Auction Platform, including by taking or ceasing to take any action, including any that are specific to the Product in respect of which the Participant participates in Auctions.

3.3       Access to the Auction Platform

3.3.1    The Participant must register at least one Participant User in respect of all Bids. The Participant's registration of Participant Users shall be subject to the additional terms and conditions set out in the CME Platforms webpage (https://www.cmegroup.com/trading/energy/auctions-us-crude-oil.html). The Participant must notify CME Platforms prior to any change in its Participant Users.

3.3.2    The Participant acknowledges and agrees that it shall be bound by any actions taken through the use of any of its Participant Users' Passwords, including the participation in Auction Runs and the resulting Transactions, whether or not such actions were authorized by the Participant and/or its Participant Users. The Participant agrees that any Notices or other communications sent to its Participant Users by CME Platforms shall be binding on the Participant.

3.4       Notification requirements

3.4.1    Each Participant shall notify CME Platforms in writing within three (3) calendar days of any, or becoming aware of any, of the following events, insofar as it relates to its participation under this Agreement:

(a)        it ceases to be able to satisfy any of the Participation Criteria or believes it may cease to do so;

(b)        any material changes are made to the information previously provided to CME Platforms; and

(c)        the Participant had any criminal actions, disciplinary proceedings against them which may have a direct impact on CME Platforms or the Auction Platform.

3.4.2    Each Participant shall provide immediate, prompt notification in writing upon becoming aware of any breach or compromise of all or any part of its systems and services, equipment or facilities used to support such systems and services, as it relates to, or is connected, in any way to the Participant’s activities with the Auction Platform. Participants will make reasonable efforts to identify the cause of such incident and take those steps deemed necessary and reasonable in order to remediate the cause of an incident to the extent the remediation is within Participant’s reasonable control.

3.4.3    Insofar as it is relevant to a Participant’s participation under the Participant Agreement and Auction Policy, each Participant shall give CME Platforms prompt prior written notice of any material change in its organization, ownership structure, or business operations, including:

(a)        a merger, combination or consolidation between the Participant and another person;

(b)        a change in the direct or indirect beneficial ownership of 10% or more of the equity of the Participant;

(c)        the sale of a significant part of the Participant's business or assets to another person;

(d)        any action taken by any government or government body or any Regulatory Authority or third party which may have a direct impact on CME Platforms or the Auction Platform;

(e)        the occurrence of an actual or threatened Insolvency Event in respect of a Participant or the imposition of any injunction or other restraint by a Regulatory Authority;

(f)         a material change in its business operations; and

(g)        a change in Nominee of Participant User(s).

3.4.4    Each Participant shall furnish to CME Platforms such documents in a timely manner with respect to any of the foregoing events as CME Platforms may from time to time require.

3.4.5    All information provided to CME Platforms by or on behalf of the Participant shall be accurate, complete in all material respects and not misleading and shall be provided in a format approved by CME Platforms. All information provided to CME Platforms shall be in English.

3.5       Right to review

3.5.1    CME Platforms shall be entitled to conduct reviews on each Participant's compliance with the Provisions. Each Participant shall for such purposes:  

(a)        provide such information, and copies of books and records as CME Platforms may reasonably request; and

(b)        cooperate with CME Platforms in the same way as set out in Provision 3.11 for such purposes.

3.6       Prohibitions

3.6.1    A Participant shall not:

(a)        breach any Applicable Law or any of these Provisions;

(b)        engage in any behavior which amounts to general market abuse, insider dealing, market manipulation, anti-competitive or exclusionary practices, money laundering, bribery or corruption, fraud or which is in breach of any similar Applicable Law and, which in the opinion of CME Platforms, would be likely to have a material adverse effect on the Participant's suitability as a Participant;

(c)        engage in any other practice which CME Platforms considers to be capable of impairing the integrity of the Auction Platform including any manipulation or attempted manipulation of the Price;  

(d)        take any action which in the opinion of CME Platforms is likely to bring CME Platforms, the Auction Platform or any of the Participants into disrepute or otherwise damage the reputation of CME Platforms or the Auction Platform;   

(e)        use any of the facilities provided by CME Platforms in contravention of the Provisions or other than for the purpose of conducting its business as a Participant; or

(f)         fail to supervise properly its Representatives in their use of the Auction Platform.     

3.7       Summary Access Denial

3.7.1    CME Platforms may take such immediate action if deemed necessary to protect the best interests of the Auction Platform or the Seller, including denying a Participant access to the Auction Platform (a “Summary Access Denial”). Such reasons may include the failure of a Participant to satisfy the Participation Criteria in Provisions 3.2.1, the failure of a Participant to enter into a Transaction, the Seller’s request, or the Participant engaging in any of the prohibited activities listed in Provision 3.6.1.   

3.7.2    The Participant shall promptly be informed of a Summary Access Denial, the effective date, time and duration of the Summary Access Denial. The Participant shall cooperate with CME Platforms as set out in Provision 3.11.2.  

3.7.3    A Participant which is subject to a Summary Access Denial may not participate in an Auction during the period of access denial but shall continue to comply with the Provisions and take such actions or cease to take such actions as CME Platforms deems necessary or appropriate.  

3.8       Emergency actions

3.8.1    CME Platforms may determine whether an emergency exists and whether emergency action is warranted. The following events and/or conditions may constitute emergencies:  

(a)        any actual, attempted or threatened behavior contrary to Provision 3.6 or an otherwise disorderly Auction Run or Auction;

(b)        any action taken by any government or government body or any Regulatory Authority or any third party which may have a direct impact on the Auction Platform;

(c)        the occurrence of an actual or threatened Insolvency Event in respect of a Participant or the imposition of any injunction or other restraint by a Regulatory Authority or a Participant which may affect the ability of that Participant to perform any obligations it may have under any Transactions;

(d)        any circumstance in which it appears that a Participant has failed to perform any obligation it may have under the Provisions or any Transaction or the Participant is in such financial or operational condition or is conducting business in such a manner that the Participant or such person cannot be permitted to continue in business without jeopardizing the safety of the Auction Platform;

(e)        Force majeure, which shall mean any circumstance (including but not limited to an act of God, strike, lockout, blockage, embargo, governmental action or terrorist activity) which is beyond the control of CME Platforms or the Participant, and, in the case of a Participant, which prevents the Buyer or Seller from making or taking delivery or effecting payment when and as provided for in the Provisions (each of which is a Force Majeure Event);  

(f)         any other circumstance which may have a severe or adverse effect on the functioning of the Auction Platform; or

(g)        any conflict between a Seller and a Participant.

3.8.2    In the event that it determines pursuant to Provision 3.8.1 that an emergency exists, CME Platforms may take any of the following actions or any other action that may be appropriate to respond to the emergency:

(a)        terminate, curtail or suspend a Participant;

(b)        limit or deny access to the Auction Platform;

(c)        limit Products available for Auction;

(d)        suspend or modify the operation of the Auction Platform;

(e)        do not determine a Price in respect of that Auction;

(f)         order any other action to address or relieve the emergency; and

(g)        call the Auction as void.

3.9       Termination of participation

3.9.1    A Participant shall give notice of its intention to terminate its participation in the Auction Platform provided no monies are owed to either CME Platforms or any Seller related to the use of the Auction Platform.

3.9.2    CME Platforms may terminate the participation of any Participant with immediate effect in the event that the Participant ceases to satisfy the Participation Criteria in Provision 3.2.1 or engaged in any prohibited behaviors in Provision 3.6. In the event that a Seller revokes approval of a Participant pursuant to Provision 3.2.1(m), it shall not become effective until the Seller provides written notice to CME Platforms of the revocation.

3.9.3    Following termination of a Participant, the Participant shall:

(a)        remain subject to the agreement and Provisions with respect to matters that occurred prior to termination provided that CME Platforms gives written Notice of the commencement of an inquiry into such matters to the former Participant within one (1) year of termination; and  

(b)        promptly discharge any of its remaining obligations under the Provisions and take such other actions as CME Platforms deems necessary or appropriate for this purpose.

3.10     A Participant which is suspended pursuant to Provision 3.8.2(a) or subject to a summary access denial pursuant to Provision 3.7 may not participate in an Auction or submit Bids during the suspension or summary access denial period but shall continue to comply with the Provisions and take such actions or cease to take such actions as CME Platforms deems necessary or appropriate.

3.11     Inquiries

3.11.1 CME Platforms may inquire about breaches or alleged breaches of the Provisions by the Participants.

3.11.2 A Participant shall cooperate fully with any inquiry irrespective of whether such Participant is the subject of or otherwise involved in the issue. Insofar as it relates to the inquiry, each Participant shall provide to CME Platforms such information in whatsoever form as CME Platforms may reasonably request, within the time period specified.

3.12     Auction fees

3.12.1 CME Platforms reserves the right to charge such fees and charges as it may determine and notify to the Participants from time to time. Full details of current CME Platforms fees can be found on the CME Platforms website (https://www.cmegroup.com/trading/energy/auctions-us-crude-oil.html). CME Platforms may terminate the participation of any Participant with immediate effect in the event that the Participant fails to timely pay such fees.

CHAPTER 4
AUCTIONS

4.1       General

4.1.1    CME Platforms will operate each Auction in accordance with this Chapter 4 and the Chapter pertaining to the Product for Auction. Participants eligible to submit Bids will participate in each Auction in which they choose to participate in accordance with this Chapter 4, and for which they have been permitted to participate in according to the Chapter pertaining to the Product for Auction.

4.1.2    Each Auction will be for a single Seller’s Product. The Seller must approve each potential Buyer eligible to participate in any given Auction and will have such contractual arrangements in place with each Participant to enable Transactions to be entered into, including contractual arrangements for settlement, payment, transfer of title, and delivery.

4.1.3    If a Seller revokes approval of a Participant pursuant to Provision 3.2.1(m), it must notify CME Platforms in writing as soon as possible, and in any event no later than three (3) Business Days. The revocation shall not become effective until the Seller provides written notice to CME Platforms.

4.1.4    No later than two hours before the start of an Auction, CME Platforms will make an Announcement of Auction to Participants and their Nominees that are eligible to submit Bids, including at least:

(a)            the Product available for Auction;

(b)            the delivery date window for each Product;

(c)             the total quantity (or range thereof) of the Product being offered at the Auction;

(d)            the minimum size of each Bid;

(e)            the Floor Price for each Bid;

(f)             the index or reference price, where applicable, for the Floor Price and all Bids;

(g)            the date of the Initial Auction;

(h)            the time of the Initial Auction; and

(i)              the duration of the Auction.

4.2       Initial Auction Run

4.2.1    CME Platforms will notify Participants and Nominees eligible to submit Bids of the Floor Price to be used in that Auction Run and the duration of the Auction Run as determined by CME Platforms in accordance with the relevant chapter of the Product offered for Auction.

4.2.2    Each eligible Participant User may submit their Bid(s) if they wish to participate in the Auction.  

4.2.3    No eligible Participant User can enter a Bid for a quantity below the minimum quantity and / or a Bid for a price below the Floor Price as set out in the Announcement of Auction.  No Participant User can reduce their Bid once entered. Bids may only be amended to a higher price.

4.2.4    No Participant User can enter, cancel or amend a Bid once the Auction Run has closed.

4.3       End of Auction Run

4.3.1    Once the Auction Run has closed, the Auction Platform will compare the total Bids and the quantity available for Auction to determine if the Auction Run has been successful or requires subsequent Auction Runs.

4.3.2    If the total quantity cannot be sold according to the terms set out in the Announcement of Auction, CME Platforms will contact the Seller to determine if a new Auction Run will commence.

4.3.3    If the total quantity cannot be sold due to a breakdown of all or any part of any of the systems and services of the Auction Platform or services, equipment or facilities used to support such systems and services, CME Platforms will declare the Auction as void, pursuant to its authority under Provision 3.8, and notify the Participants. CME Platforms will also contact the Seller to determine if a new Auction Run will commence.

4.4       Subsequent Auction Runs

4.4.1    If the total quantity up for Auction has not been successfully Bid for during the initial Auction Run or a subsequent Auction Run, CME Platforms and Seller may initiate a subsequent Auction Run.  

4.4.2    Provisions 4.2 and 4.3 apply equally to each subsequent Auction Run.

4.4.3    All Bids are cancelled at the end of an Auction Run. The Seller may alter the terms set out in the Announcement of Auction for the subsequent Auction Run.

4.4.4    Entering a Bid in one Auction Run does not commit the Participant User to entering a Bid in any other Auction Run.

4.5       Transactions

4.5.1    The Price of each Transaction will be the Floor Price plus the highest premium to the Floor Price submitted through a Bid, multiplied by the total quantity of the Product in the bid.

4.5.2    Transactions will be awarded to the first Participant with the highest Bid above the Floor Price, for the price and quantity Bid. This is also known as a Binding Transaction.

4.5.3    Should the Auction Seller have several Products to award, as announced in the Announcement of Auction, the first Participant(s) with the highest Bid(s) above the Floor Price will be awarded their Bid quantity until the Seller’s total quantity will have been allocated.     

4.5.4    In the event that a Participant fails to enter into the Transaction, the Participant shall promptly notify CME Platforms. However, CME Platforms shall have no responsibility for a failure of any Participant to enter into a Transaction or other arrangement, as applicable.   

4.6       Prohibited practices

4.6.1    A person shall not engage in any of the behavior set out in Provision 3.6.

4.6.2    Notwithstanding the generality of, and without prejudice to, Provision 4.6.1, a Participant shall not engage in the following practices or behavior:

(a)            submitting a Bid which, if it resulted in a Transaction, the Participant does not intend to make or take delivery, would not be willing or able to enter into and settle or close out or which is otherwise not bona fide;

(b)            manipulating or attempting to manipulate the Auction process or the determination of the Price; and

(c)             reporting, publishing or disseminating false information about Bids or Transactions.

CHAPTER 5
ENTERPRISE CRUDE OIL AUCTION

 

5.1       General

5.1.1    The Auction is for Unblended Midland WTI Crude Oil, having an API gravity range of [40-45] [41-44] and containing no more than .4% sulfur, as delivered free on board at the Enterprise Houston Ship Channel Terminal in Houston, Texas (“Enterprise Crude Oil”).

5.1.2    Only Participants approved by Enterprise and that agree to the Enterprise General Terms and Conditions for Sale of Product FOB Terminal and Confirmation for Export Sale of Product FOB Terminal (“Enterprise General Terms and Conditions”) may participate in the Enterprise Crude Oil Auctions.

5.1.3    Deliveries and payment shall be carried out and made pursuant to the Enterprise General Terms and Conditions.

5.1.4    If an Auction is held for a range of total quantity of Enterprise Crude Oil, the Buyer will inform CME Platforms of the final quantity for the Transaction within fifteen (15) minutes following the close of the Auction.

5.2       Destinations

5.2.1    No shipment of Enterprise Crude Oil made under the terms of this Auction Policy shall be destined to a port of any country which the Seller or CME Platforms has designated as a prescribed country or which is subject to internationally accepted sanctions. 

5.2.2    The Buyer shall provide the Seller with a certificate of discharge of every shipment issued by the discharge port authorities within a period not exceeding six (6) months from the bill of lading date.